Archive for May, 2008

Monopoly Money

Posted in Uncategorized on May 10, 2008 by luckyjet

We learned in school (4th grade I think) that monopolies are bad.  A long time ago companies like Standard Oil were so big that they could “Jack Up” prices and bring unfair pressure to the market by way of high prices and excess profits.

The last fifteen to twenty years have seen corporations grow enormously.  Just make a list of where you spend your money for the things you need and you will no doubt find several mega-multi-national-corps.

The mega-corps have eluded Federal Anti-Trust enforcement because they are so goddam nice that they offer low prices to the poor downbeaten consumer in these trying times.  Now more people can afford more stuff. More people can travel by air. More people can by Chinese imports.

The Anit-Trust laws should have also prevented undue market pressure in order to “Jack Prices Down” just as well as “Up”. Artificially lowering prices places pressure on vendors to provide products at a lower and lower cost. This forces wages down, then forces jobs to be exported.

For a while the cheaper prices seem like a good deal. For the first few turns around the game board things seem alright, then the Mom n Pop specialty stores all go away. Oh well.

Next turn around the board you notice the local landscape has changed. Box stores selling standardized crap from China are everywhere. Local shops are limited to the very specialized, skilled artisan. Clothing alterations, violin repair, hair salons, and whorehouses are about all that remain.

Next roll of the dice there isn’t anywhere to work other than the mega-corp outlet or the foreign factory up the road.  Unless you are a good seamstress, violin repair tech or whatever. Hmmmm.

Then, with our balance of trade all out of wack prices for everything go way up. The problem has become such that everything is imported and we pay for imports with our devalued dollar.

So how did this work out better?

I left out the part about the war, but that is almost the same tirade.

What has this to do with the airlines?  Everything. They run on jet fuel. The jet fuel is made from the same crude oil as gasoline. It is actually the same stuff as home heating oil.

Oil is traded world wide in US dollars. When the dollar is de-valued the price of oil must go up. This part at least is simple.

Why is the dollar de-valued? Largely because our government has been printing money as fast as possible the last few years. Your economic stimulus check, money to pay Haliburton for Iraq, money to pay Haliburton for New Orleans, money to pay for bailing out the poor poor banking “industry”, money to bail out the poor poor financial instrument securities trading firms, money, money, money. The Federal Government has been throwing thousands of billions of dollars around.

This might be our way of wrecking Chinese investment in our treasury bills. The problem with this is that it will wreck most of America in the process, including our Airline industry.

This won’t matter so long as we can blame it on something we can’t quite see or define.  

What happens next? I dunno, but I’m sure we can find somebody else to blame it on.  Maybe Mexico.

Happy Landings